5. The economics of sustainable agriculture: adding a downstream perspective.

J. of Sustainable Agriculture, 2, 1992, pp. 75-87

The objectives of this downstream perspective and assessment of the economics of sustainable agriculture in this paper are:

- to explain to a general audience (broader than economists) that sustainability from an economic perspective as a minimum requires accounting for both on and off-site effects of economic activity;- to focus on soil erosion and related water quality impacts (including changing property rights) as the major sub-set of downstream economics of alternative farming systems, and- to present some empirical results and policy implications of Ohio downstream impacts which would seem to be generalizable to many other settings.

More empirical evidence is needed regarding on-site and downstream costs (particularly groundwater contamination) and returns of alternative tillage and rotation systems if socially optimal systems are to be identified. The evidence to date suggests that on average downstream costs of soil erosion are not trivial and that they exceed the average on-site costs of soil erosion. This implies that some form of tax, subsidy, technical assistance or regulatory intervention may be appropriate and necessary. The evidence also suggests that downstream costs per unit of soil loss can vary dramatically from site to site.

This points to the extreme importance of targeting control measures.

The empirical evidence on the economics of soil erosion to date suggests the following for consideration:

- Further research and extension of information to farmers on sustainable reduced tillage and expanded rotation systems which reduce downstream costs without reducing profitability to the farmer.- More comprehensive research on downstream costs of soil erosion and related chemical contamination of water and identification of any strong correlated or proxies, e.g., population, existence of harbors, density of private wells, etc. for these impacts.- Taxes on the inputs, such as nitrogen (e.g., N without inhibitors) and selected pesticides (e.g., Atrazine) which have been most problematic in surface and groundwater contamination to at least provide revenues for further research.

In sum, more comprehensive economic assessment, particularly of the downstream costs and benefits of alternative farming systems, is likely to favour those systems that are less erosive and chemically intensive.

This in turn leads to the need to reassess the entitlements and property rights related to alternative farming systems and their downstream impacts. Evidence to date suggests shifts in favour of the impacted downstream users and these trends will probably continue. Thus, sustainable agriculture is an idea that is currently ecologically, and in many cases, economically attractive. In addition, its future economic attractiveness is likely to increase.